GM introduced its smallest diesel car engine anywhere in the world to power its Chevrolet Beat in India as the US-based giant took on rivals in the fast-growing small diesel vehicle market.

The 1.0-litre diesel engine has been developed by GM's engineers in Europe and modified to suit Indian driving conditions, Karl Slym, president and managing director at GM India, told a news conference.

Slym said GM India is the sole producer of the new diesel engine and there are plans to export it to Europe.

GM India intends to introduce five new vehicles in the next 18 months in India, including a hatchback, he said.

The new diesel hatchback is aimed at helping GM boost sales in Asia's third-largest automobile market, where the popularity of diesel vehicles is rising due to the fuel's lower cost.

Maruti sells its Swift and Ritz hatchbacks with diesel engines, while Tata Motors' flagship Indica is the cheapest car in the diesel segment with prices starting at 395,453 rupees ($8,900) in New Delhi.

The diesel Beat's base model is priced at 429,000 rupees at showrooms in the capital.

GM India sold a record 110,804 cars in India in 2010, which it aims to increase to about 150,000 vehicles this year and 200,000 next year.

Diesel costs 41.29 rupees per litre, far less than the 63.70 per litre for petrol. The government controls diesel costs while fuel-marketing firms can set petrol prices.